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Comparison of Job Evaluation Methods: Implications for the Salaries Design in Publishing Company Litasari W Advances in Intelligent Systems Research, volume 173 1st International Conference on Engineering and Management in Industrial System (ICOEMIS 2019) Comparison of Job Evaluation Methods: Implications for the Salaries Design in Publishing Company Litasari W. Suwarsono1, a, Atya Nur Aisha1,b and Fida N. Nugraha1,c 1Industrial Engineering Department, School of Industrial and System Engineering, Telkom University, Indonesia [email protected], [email protected], [email protected] Keywords: job relative value, job evaluation, point system, Cullen Egan Dell, compensation Abstract - Job evaluation is an crucial factor in compensation design because it relates to issues of equity and worker satisfaction. Case study at the Human Resources Department of a publishing company show that there is a problem with the compensation system that is felt to be unfair. The existing method used in the company was job classification without considering workload. Therefore, it is important to determine the job relative value as a reference for designing compensation. This study compared two job evaluation approach using point system method: (1) an adjusted factors and weight; (2) standardized factors and weight using Cullen Egan Dell. Finding in this study shows that different approach in conducting the job evaluation results different number of job clusters. It will affect the proposed compensation design, which from the first approach (1) requires an increase in compensation budget of 4.9% from the existing budget, while second approach (2) requires a higher budget allocation of 11.6%. Based on the results of the comparison, company can choose alternatives that align with availability of budget, business strategies and compensation strategies to retain employees or recruit potential prospective employees. Introduction Rapid change of technology in all sector industries became main reason of organizational change in many companies. PT XYZ, a publishing company, also undergoing change in its organization. A number of challenges faced by publishing based company, including change of people's lifestyles from the original reading of print media to digital media, which in turn will change the company's business strategy. A survey held by Nielsen Indonesia, said there was a decline in the number of print media (magazines) since 2012 to 2017 by 41% and newspapers by 3%. There was actually no decline from the numbers of media readers, despite changes to the platform media of reading. It was also revealed that the generation Z segment preferred to read in digital media [1]. Thus, conventional publishing company, including here PT XYZ, is required to be able to make changes by considering the digital media platform in its media business. The existence of change can trigger feelings of distress, especially when employees are not equipped with adequate information, support and consulting services [2]. This lack of support will lead to employee job dissatisfaction and subsequenly cause of employee turnover. Justice or fairness issues, giving a fair compensation for example, have an impact to job satisfaction [3,4]. Some employee of PT XYZ perceived that the compensation system was unfair and there was no clear explanation about the policiy of that. Of course, it increase of job dissatisfaction on employee of PT XYZ. Effective compensation can have a positive impact on employee satisfaction and further increases employee retention [5,6]. Another challenge of publishing company is related to talent management. A number of studies showed relation between compensation, job satisfaction and employee retention [6]; salary with retention [7,8]. Increasing retention especially for high performance employee that can be done by offering Copyright © 2019, the Authors. Published by Atlantis Press. This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/). 305 Advances in Intelligent Systems Research, volume 173 competitive compensation. Some types of compensation that are still high demand include base salary, merit pay and year-end bonus [8]. Issue of justice in providing rewards included in compensation is also the factor that determines employee job satisfaction [7,9] and improve expected outcomes [10]. Evaluating jobs within organization could be an good effort to create fair compensation system. Job evaluation is the process of evaluating the relative value or contribution of various positions for a company [11]. There are several methods to execute job evaluations, including ranking methods, job grade, point system and factor comparison [12]. Point system and factor comparison methods are an analytical job evaluation schemes [13]. The point system is most widely used by company because its advantages, such as more objective and better explain the differences in each position based on existing criteria [14]. Some studies showed the effectiveness of job evaluation implementation using point factor systems at the operational level [15,16,17], and at managerial level [18]. However, there is still limited research that compares the factors, weighting on point factors and their impact on the company's budget and compensation strategies. This study aims to compare the compared two approach in job evaluation: (1) adjusted factors and (2) standardized factors from Mercer Cullen Egan Dell (CED). Both of the method are point factor system, but Mercer CED have more complex methodology but more easier to use by companies because it clear and consistent guidelines. How was the relatives positions value which is using both method impact the basic salary design of PT XYZ? The results of this study are expected to provide some alternatives about compensation strategy should be taken by management based on its availability budget and business strategy. Literature Review Job Evaluation. Job evaluation is a systematic process to compare inter jobs internally within organization. Objectives to evaluate job are providing a base for pay structure in the company, and basic policy for other compensation such as bonus policiy and incentives. The formal process of the evaluation is more acceptable than informal process and systematic process will enhance issue of fairness and transparency in the compensation process. There were two job evaluation schemes to value the jobs : analytical and non-analytical schemes. Both, especially analytical, are used to grade job so organization can make some decision about salary/ employee payroll. Some features of analytical job scheme are systematic, judgemental, concern to the job not person, and concern with internal relatives [13]. Point factor rating and factor comparison are example of analytical job evaluation scheme. Point System. Point system is most common of the analytical job evaluation schemes that breaking jobs into some factors, subfactors or key elements. Some stages should be used to evaluated the job in point system. First stage is select a number of job factors, including in this factors are characteristics of job demands or requirements such as responsibility, interpersonal skills, education. These factors also called as compensable factors. Next stage is design factor plan, that devided factors into hierarchical of levels. Definition of each level should be clear, so evaluator can decide the level applies in job to be evaluated. After design factor plan, evaluator analyze the job or role. Purpose of this stage is to gather factual evidence, usually from job holder, so evaluator can decide what level the factor exist on a job. Panels studies and made agreement about the level of the factor, the score of each factor and total score. Some studies tried to determine factors that will help in the identification of relative job value (compensable factors). Byars and Rue [19] revealed factors that most common used by organization to value the job are responsibility, working skills, expertise, effort and work conditions. Meanwhile [13] suggest decision making, interpersonal skills, responsibility and other financial or non-financial resources, emotional demands and physical demands. Other studies suggest creativity, responsibility, working experience, education, working skills, discipline, and work results [20,21]. 306 Advances in Intelligent Systems Research, volume 173 Other studies focus on how it impact to organization budget for payroll or compensation planning. An example of compensation planning using the point rating system supported by analytical hierarchy process was done by [15]. In their research on PT. Pabrik Kaos Aseli, the jobs in PT. Pabrik Kaos Aseli were broken down—by doing job analysis—into different compensable factors (education, complexity, responsibility, effort, and working environment). Then, the payment structure was made by using the 1:3 interpolation method. Another research from [16] aims to analyze and evaluate the positions in a textile company using the same method. The output are job description, job specification, and basic salary for each position in the textile company. The proposed basic salary for the positions increased by 10.24% except for 8 positions—that were already excessive in salary based on the point factor system. Study from [22] compared different weighting methods. The payment rating was ranked, and the order of 52 job samples in the study was the same for all of the weighting method. But once the job payment was calculated, the pay grades were different. The next finding shows that certain jobs both in male and female dominated ones
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